‘Leo Daly littered NMI with inadequately designed buildings’

The Nebraska corporation that designed and built the defective terminal project at the Francisco C. Ada International Airport has littered the CNMI with inadequately designed buildings, according to attorney Sean E. Frink.

Frink filed in federal court last week Boeing Company’s and Boeing Service Company’s first amended lawsuit against the Nebraska-based corporation, Leo A. Daly Company, or LAD.

Frink said Boeing worked closely with the federal government to implement upgraded security systems at airports following the terrorist attacks of Sept. 11, 2001.

The Commonwealth Ports Authority contracted with Boeing for the design and construction of the terminal project. Boeing entered into subcontracts with LAD, under which LAD was responsible for both the design and construction management of the project.

Boeing is now suing LAD for breach of contract, express contractual indemnity, implied contractual indemnity, professional malpractice, negligence, violation of CNMI Consumer Protection Act, violations of Building Code, bad faith, and contributions.

Boeing asked the U.S. District Court for the NMI to hold LAD liable to pay them over $5 million in damages and reimburse them of all costs and attorneys’ fees.

Frink stated that Boeing had no choice but to file the lawsuit because LAD refused to fix the structure, to settle the parties’ dispute, or to reimburse Boeing for the damage caused by LAD’s errors.

Frink said that, as Boeing later learned, LAD’s errors were not unique to the terminal project as LAD made similar errors on at least two other projects within the CNMI. He did not name the two other projects.

Court records show that the CNMI government sued LAD in 2009 for the defective building plan of the dialysis center.

The dialysis center project started out as a $5-million undertaking during then-governor Juan N. Babauta’s administration. The project ballooned to a $22-million project in the course of its five-year construction.

LAD settled the government’s $10-million lawsuit for $2 million, with no admission of liability on its side.

In CPA’s project, Frink said that LAD failed to design the project consistent with applicable seismic codes governing earthquake resistance—it completely ignored applicable seismic code requirements.

“As a result, the project as designed by LAD and built contains serious structural deficiencies, and also caused the existing structure—to which the project was connected—to violate seismic code requirements by more than tripling the mass of the existing structure without seismically upgrading it, rendering the existing structure seismically hazardous,” he said.

Frink said as a result of LAD’s negligent and deficient design, CPA issued a demand to Boeing, asking Boeing to tear down and rebuild the project and pay CPA millions of dollars in damages and attorneys’ fees.

CPA and Boeing negotiated the matter for more than a year.

Frink said Boeing attempted to involve LAD in the negotiations, to solicit input into the most efficient way to repair the facility and resolve the disputes at once.

Frink said LAD did not accept Boeing’s tender of the CPA’s claim without reservation and did not participate in good faith in the parties’ discussions, and thus Boeing negotiated a full and fair settlement of CPA’s claims.

Last August, U.S. District Court for the NMI designated Judge J. Michael Seabright dismissed CPA’s lawsuit against Boeing after the parties reached a settlement that has been approved by the Superior Court.

Seabright, however, ruled that Boeing’s lawsuit against LAD, which is also pending before the federal court, will continue.

In its lawsuit, CPA asked the court to order the defendants to pay in excess of $1 million for damages, courts costs, and attorney’s fees.